Supply chain and labor challenges put a dent in REV Group Inc.’s production in the third quarter, but the specialty vehicle manufacturer still booked consolidated net sales of $593.3 million for the period, representing an increase of 1.9% compared to $582.2 million the same quarter last year. The gain was primarily due to an increase in net sales in the Recreation and Commercial segments partially offset by a decrease in net sales in the Fire and Emergency segment, the company reported.
“We delivered another strong quarter of earnings performance and cash generation while continuing to manage through supply chain and labor challenges that impacted our top line growth,” REV Group Inc. President and CEO Rod Rushing said in the quarterly earnings release statement. “Our end markets remain strong with solid order intake in each of our segments, resulting in REV Group’s seventh consecutive record backlog.”
In a conference call with investment analysts, Rushing emphasized the company nearly doubled it adjusted EBITDA performance compared to 2020 despite the “top line” implications of the operational challenges.
“We continued to experience headwinds with staffing, workers, and absenteeism, as well as shortages in raw materials and components, such as semiconductors, furniture, wiring harnesses, pumps, axels and chassis,” he said. “Throughout this fiscal year, our procurement team has engaged with our supplier partners and has generally been able to source to allow continued production.
“However, as we moved through the quarter, these labor and material shortages became more difficult to offset and we were unable to meet our production targets. As a result, approximately $65 million of revenues slipped out of the quarter as our deliveries were delayed. I would like to be clear, though, that these are delayed deliveries due to timing of materials, components and chassis, but they are not lost sales.”
Fire & Emergency Segment
F&E segment net sales were $269.5 million in the third quarter 2021, a decrease of $37.2 million, or 12.1%, from $306.7 million in the third quarter 2020.
F&E segment backlog at the end of the third quarter 2021 was $1.2 billion, an increase of $189.8 million compared to $1,039.7 million at the end of the third quarter 2020. The increase was primarily the result of continued strong demand and order intake for fire apparatus and ambulance units.
Commercial Segment
Commercial segment net sales were $111.3 million in the third quarter 2021, an increase of $18.9 million, or 20.5%, from $92.4 million in the third quarter 2020. The increase in net sales compared to the prior year quarter was primarily due to increased shipments of municipal transit buses, terminal trucks and street sweepers partially offset by decreased shipments of school buses.
Commercial segment backlog at the end of the third quarter 2021 was $312.0 million, an increase of $11.5 million compared to $300.5 million at the end of the third quarter 2020. The increase was primarily the result of increased orders for school busses, terminal trucks and street sweepers, partially offset by a decline in orders for municipal transit buses.
Recreation Segment
Recreation segment net sales were $212.5 million in the third quarter 2021, an increase of $29.8 million, or 16.3%, from $182.7 million in the third quarter 2020. The increase in net sales compared to the prior year quarter was primarily due to increased unit shipments and lower discounting and sales allowances partially offset by lower line rates related to supply chain disruption and labor constraints.
Backlog at the end of the third quarter 2021 was $1,157.0 million, an increase of $829.2 million compared to $327.8 million at the end of the third quarter 2020. The increase was primarily the result of continued strong demand and order intake across all product categories.